Fear Of The Unknown - How Do We Know When Enough Is Enough?

“It is the unknown we fear when we look upon death and darkness, nothing more.”
― J.K. Rowling, Harry Potter and the Half-Blood Prince

“and may be even early retirement.”
– BusyMom

[ Day 1 of 2000 ]

The hardest thing in deciding to retire early was determining how much money we needed to retire.. Honestly, it is still scary. We cannot afford to run out of money, say, after 20 years.

Imagine the regrets if one of us fell sick a few years from now, especially after our skills are not relevant any more. Knowing that we could have easily afforded the treatments, etc, had we just continued working a bit longer… That would kill us then and there.

What if GBoy gets into a great school like Harvard or MIT but does not get a scholarship? Will I be happy for him to attend a slightly less prestigious college just because we cannot afford the fees? It would have been fine if we could never have saved up that much. But the truth is, we can save that much. Given the acceptance rates at those places, I think we are safe. But the same scenario could occur with other colleges in their place.

I see a lot of FIRE (financial independence & early retirement) blogs out there. I do not see how they deal with issues like these. Does it make a difference that they are male and I am not? Do I think differently or am I the only one who cares to admit it?

I do not know how I am going to deal with all of that – if and when they occur. What I know is this – I do not want to be on my death bed, wishing that I had spent more time with GBoy instead of leaving him a million dollars.

Now, to the actual numbers. I have no idea if I should say the numbers out loud. Studies, or rather other websites, say that if you could live on 4% of your savings, you can retire on it for 30 years. Considering that our retirement period could be much longer, I think we might need to live on 3.5 % on even 3% of what we have saved.

Our expenses in retirement should be less than 40,000 dollars. At least, that is our aim. We cannot manage it right now. Part of our expenses now are from child care (since we are not home when GBoy gets back from school). We also get a cleaning service to come home twice a month. These are expenses that will definitely be eliminated if I were not working. I also suspect that our food related expenses would come down a bit. We have 2,000 days to practice this lifestyle. Let’s see how it goes. The added expense that would occur is the health insurance. It gets deducted automatically right now, we don’t think of it is an expense. It doesn’t help that our property taxes are high. Our home costs around 500,000 dollars, and the taxes come to around 9000 dollars a year. Living on 31,000 dollars a year including health insurance – I guess it is doable, although probably not a cakewalk.

Before we retire, we would pay off our mortgage. The last thing I want in retirement is to worry about the mortgage. I also do not want to add the value of the house to our nest egg. we plan to live here for a few more years after we retire. At least until GBoy furnishes his school. The property prices may go up, but we don’t know that. Since that amounts to a buffer of about 500,000 dollars, may be we can afford to live on 4% of the rest.

40,000 / 4% = 1 million dollars.

That is what we would need to retire. I am not worrying about the extra treatment or the Harvard fees just yet.

One other thing I know about myself is this. My retirement is not going to be staying at home all day and just wasting time. I am probably going to work as a substitute teacher in the local school system. I will start a few shops on etsy and sell stuff that I crafted. I might even do minimum wage jobs that my town has. My dream job would be to work in the local library. (Note to self: look up what qualification is required for that) I plan to make some money in my retirement. Ideally, I wouldn’t need any of it, and may be I can leave it to charity when I die.

Now that you have seen my thought process, let me share with you my secret. We may not have all of that 1 million dollars when we retire. But retire, we will. We will have something close, and the rest of the expenses will be handled by whatever we happen to make.

Let’s be clear, though. This is not a choice. We have no choice but to take early retirement. The high stress levels, the sleepless nights, the running around we now call life – it has to end. Or we might. One day too soon.